Loyalty360

A new report by Javelin Strategy & Research looked at the relationship between banks, merchants and consumers to determine how recent financial regulatory reform, including the creation of the Consumer Financial Protection Bureau and the Durbin Amendment, will affect customer loyalty in banking. 

The report found that customer satisfaction fell to 79% in 2010, down from 92% in 2004. Banks will need to increase customer service and, according to Beth Robertson, director of payments research at Javelin, "assume a more visible and tangible pro-consumer stance."

Another new survey from Accenture found that customer loyalty dropped for 59% of the banks surveyed, signaling what Noel Gordon, managing director of Accenture's banking industry practice, calls "a fundamental power shift" from the banks to the customer. 

I agree with these individuals ---- to a certain extent.  There are also studies that contend that with the average American having 7.1 banking relationships, the ability to consolidate those relationships with one bank (i.e. checking, savings, mortgage, HELOC, etc) lowers the rates of attrition.

The problem is that banks have traditionally been very proprietary.  They have not wanted to share customer information across the various silos because a number of the bank’s products have contradictory profit modules (i.e. someone opening a 2nd line of credit on their house is usually going to pay off their credit card).

Today, however, banks are opening up to this.  And, with the main provision with overdraft protection going into effect this week, we are apt to see banks loosening on this even further.